Fee Suit Scores Own Goal: $7 M to Client

It’s a common belief among attorneys that suing a client over unpaid fees is a dangerous practice, and a recent decision by a New York jury shows why.

Filing suit to collect unpaid legal fees from a client partnership cost a now-defunct New York law firm a $7 million judgment, after one of the client partners successfully counterclaimed alleging attorney ethical violations, reports New York Lawyer.

Henry I. Rothman, a partner of the former Parker Chapin Flattau & Klimpl, abandoned two of the client partnership’s three principals and breached his fiduciary duty by representing only one of them in a lucrative deal to purchase an Israeli investment bank branch that should have been available to the entire partnership, the jury found earlier this month. It awarded $2 million in compensatory damages and $5 million in punitive damages after a six-day trial, according to the plaintiff’s law firm, Levy Phillips & Konisberg.

Alvin Stein, a lawyer at Troutman Sanders who represented Parker Chapin, says the “verdict is wrong on the law and facts” and may be appealed, New York Lawyer reports. Although Stein disagrees, Theresa Vitello of Levy Phillips, says Rothman–who was not sued personally–and other Parker Chapin partners at the time of the brokerage purchase can be held personally liable for the $7 million. Stein says they are protected from personal liability because Parker Chapin was a limited liability law partnership.

Rothman is now a partner at Troutman Sanders, which has a number of former Parker Chapin lawyers on its attorney roster.